It is currently 17 Aug 2017, 23:40

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Paying off interest while in school - question

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Director
Director
avatar
Joined: 20 May 2013
Posts: 599

Kudos [?]: 285 [0], given: 54

Location: United States
Concentration: Strategy, Finance
GMAT 1: 750 Q49 V44
Premium Member Reviews Badge
Paying off interest while in school - question [#permalink]

Show Tags

New post 03 Jun 2014, 11:00
Can someone explain to me the advantage of paying off loan interest while in school, as opposed to just taking out less money? I understand there is a tax advantage to paying off interest in school, but I don't see how they outweighs just taking out less money.

Namely why is taking out $58k and paying $3k in interest better than taking out $55k and letting interest accrue?

Kudos [?]: 285 [0], given: 54

Senior Manager
Senior Manager
User avatar
Joined: 25 Jun 2012
Posts: 382

Kudos [?]: 200 [0], given: 13

Concentration: General Management
Premium Member
Re: Paying off interest while in school - question [#permalink]

Show Tags

New post 03 Jun 2014, 11:16
I've been trying to understand this as well.
_________________

Advice, Musings, and Experiences from a member of the HBS Class of 2016
http://DefyingGravityMBA.blogspot.com/

Kudos [?]: 200 [0], given: 13

Current Student
avatar
Joined: 30 Jan 2010
Posts: 301

Kudos [?]: 140 [0], given: 73

Location: United States
Concentration: Strategy, Economics
Schools: Chicago Booth - Class of 2015
WE: Project Management (Real Estate)
Re: Paying off interest while in school - question [#permalink]

Show Tags

New post 03 Jun 2014, 20:49
Banks typically offer lower rates for full-pay or interest-only payments while still in school. For some lenders, I found it 0.25% cheaper for interest only (compared to fully deferred) and another 0.25% for full pay. For one of the lenders I ended up selecting, the discount for interest-only was 1.18%.

Kudos [?]: 140 [0], given: 73

Director
Director
avatar
Joined: 20 May 2013
Posts: 599

Kudos [?]: 285 [0], given: 54

Location: United States
Concentration: Strategy, Finance
GMAT 1: 750 Q49 V44
Premium Member Reviews Badge
Re: Paying off interest while in school - question [#permalink]

Show Tags

New post 04 Jun 2014, 06:23
so if I wasn't offered a lower interest rate, there's no advantage?

Kudos [?]: 285 [0], given: 54

Senior Manager
Senior Manager
avatar
Status: busyness school student
Joined: 09 Sep 2013
Posts: 419

Kudos [?]: 301 [0], given: 145

Location: United States
Schools: Tepper '16 (M)
GMAT 1: 730 Q52 V37
Premium Member
Re: Paying off interest while in school - question [#permalink]

Show Tags

New post 04 Jun 2014, 06:33
Correct.

For CitizensBank, the difference in interest rate between Deferred and Immediate/Interest Only is a whopping 0.75% - 1.75%. Interest Only seems to be the way to go (at least in my case with CitizensBank)
_________________

My review of some of the CAT practice exams
You can usually find me on gmatclub's chat.

Kudos [?]: 301 [0], given: 145

Re: Paying off interest while in school - question   [#permalink] 04 Jun 2014, 06:33
    Similar topics Author Replies Last post
Similar
Topics:
1 Must do while in bschool + How to pay for Bschool Bballer84 2 24 Dec 2012, 20:36
Experts publish their posts in the topic Keep cash or pay off debt before bschool? hereicome 3 28 Feb 2016, 16:08
2 Children while in school? greytmba 9 07 Dec 2010, 09:45
helping to pay off bschool tuition by interviewing jpjazzman 3 28 Jan 2008, 17:08
Issue while in school - Please advise Kurtenhamer 10 11 Jan 2008, 20:44
Display posts from previous: Sort by

Paying off interest while in school - question

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.